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This indicator visualizes a sudden day of high volatility after a period of lower volatility. Hence the term ‘expansion day’. ATR refers to the Average True Range (created by J. Welles Wilder). This measure of volatility is used to calculate the indicator. A sudden increase in volatility always brings opportunities for traders.
The ATR Expansion Day indicator is used by the well-known German trader Birger Schäfermeier. Birger Schäfermeier uses this information to identify trading opportunities for the next day.
The advantages of this indicator:
The time frame is always a 1-day chart. The indicator is shown below the main chart. Two components make up the indicator: a band and a histogram. The band indicates the volatility range. The histogram indicates the day’s price range (high minus low).
When the histogram goes above the band, an expansion day occurs.
This example shows seven expansion days. Three of these occur in sequence. Expansion days and the days following expansion days often offer traders good opportunities.
Open the chart of an instrument. In the WHS Proposals folder, select the ATR Expansion Day indicator.